Prudential's Japan Sales Suspension Cut An Estimated $140 Million From Third-Quarter Operating Income
The insurer also put PGIM assets at $1.47 trillion and renamed its International Businesses segment "Japan Businesses."
Prudential Financial said the sales suspension at Prudential of Japan reduced the Japan Businesses' pre-tax adjusted operating income by an estimated $140 million in the third quarter, according to an 8-K filed Thursday. The figures are preliminary, ahead of full results due November 3.
What the 8-K says
The $140 million estimate includes one-time costs, mainly tied to Life Planner compensation, lost sales and the effect of surrenders, the filing said.
PGIM, the investment management segment, had $1.47 trillion in assets under management at September 30. Its other related revenues, net of related expenses, were about $20 million for the quarter on an adjusted operating income basis. Those revenues cover incentive fees, transaction fees, and income from seed and co-investments and mortgage originations.
Alternative investment income in the general account, excluding the Closed Block Division and Funds Withheld portfolios, is estimated at roughly $15 million to $35 million above the company's near-term expectations.
The company called all of this estimated and unaudited. It said it had not finished its closing procedures, so actual results could be materially different.
Segment changes
In August, Prudential announced its intent to exit certain emerging markets businesses. Effective in the third quarter, results for those businesses, including Brazil and Mexico, now sit in Divested and Run-off Businesses within Corporate and Other. The former International Businesses segment is now called "Japan Businesses."
The results of its indirect 40% stake in AFP Habitat, a pension business, move to the Retirement segment. The changes apply retroactively and do not alter previously issued consolidated financial statements.
An exhibit recasts the second-quarter financial supplement. In it, Japan Businesses adjusted operating income before taxes was $694 million for the second quarter, against $654 million a year earlier. Annualized new business premiums from Life Planners were $22 million in the second quarter, versus $172 million in the year-earlier quarter, on an actual exchange rate basis.
What to watch
Prudential will release third-quarter earnings and its quarterly financial supplement on November 3. Those will replace the preliminary estimates with closed results.
Until November 3, the $140 million figure is an estimate, and the company has said it could change.
Sources
- 8-K Filing — PRUDENTIAL FINANCIAL INC (PRU) — SEC EDGAR
- Exhibit exhibit991-2q26qfsrestatem.htm — PRUDENTIAL FINANCIAL INC 8-K exhibit — SEC EDGAR
- Prudential Financial, Inc. (PRU) stock price, news, quote and history - Yahoo Finance — Yahoo Finance
- PRU Outperforms Industry, Trades at a Discount: Time to Exit or Hold? — Yahoo Finance
- Regulatory Headwinds for Prudential Financial's Japan Business | Morningstar — morningstar.com
